Boutique Hotel Bidding Tool Expands Platform

Backed by $2.4 million in seed funding when it launched last summer, Stayful straddles the line between the traditional online booking tool model and the opaque Priceline model. It's a booking and bidding service for boutique hotels led by cofounder and CEO Cheryl Rosner, a former president of Expedia Corporate Travel. This month, Stayful boosted its distribution reach by adding two cities to its roster.

By adding hotels in Boston and Seattle, Stayful now is active in nine cities, including New York, San Francisco, Chicago, Los Angeles, Miami, San Diego and Phoenix. It also plans to add hotels in New Orleans and Portland, Ore., and is eyeing international expansion, first in Montreal, Toronto and Vancouver and later this year in Paris and London. At the same time, the tool is exploring ways to better adapt to the mobile environment, Rosner said.

For their desired dates, Stayful users, which largely are in the 25-to-39 age range, see a list of available hotels__boutique and/or independent properties only__as well as a price for their stay, but they also can offer a bid at a rate of their choosing. As a guide, the site provides a suggested bid based on an algorithm that takes into consideration the hotel's rate history and travel dates. Hotels then decide whether to accept or reject the bid, or offer a counterbid.

There are restrictions. Users may bid only on stays within a 30-day window and may bid only on three hotels in a city within a 24-hour period. Users also cannot bid on a hotel more than once within that period and are not able to haggle further after a hotel proposes a counteroffer.

All bookings are prepaid and nonrefundable, as Stayful's revenue model is based on a fee taken from that advance purchase, said Rosner.

The latter policy might pose the biggest barrier between Stayful and managed corporate travel, as many organizations bar their travelers from booking prepaid, nonrefundable hotel stays. However, Rosner said she sees corporate travel applications for those companies that allow such bookings.

Even with an allowable 30-day window, Stayful bookings trend closer to seven to 10 days prior to a stay, Rosner said. When using corporate online booking tools, travelers also separately could run Stayful's algorithm "in the background" to compare available corporate rates with Stayful's rates and suggested bids, she said.

"On the corporate travel side, when you're booking that close in, there's the concern that you're not going to get a great value any longer," Rosner said. "In going through the bid model, you can see everything currently in the market, having exposure to online published rates."

Rosner said she's had discussions with some corporate travel buyers who have used suggested bids as a launching point to renegotiate with a hotel if they prove better than corporate rates they already have at that hotel.

Of course, Stayful's corporate travel applications also will depend on its ability to curate a wide network of participating hotels. Travelers can see rates and submit bids to boutique hotels with which Stayful does not have an agreement, but the process takes longer compared with the instantaneous response from member hotels. When users make a bid to a hotel with which Stayful does not have an agreement, the tool takes that as a cue to invite the hotel to its network.

"We're following the lead of consumers, where they would like to see us expand," Rosner said.